Indonesia has posted one of the widest monthly trade deficits in its history for April as exports have slumped and the expected fall in imports failed to materialise, the national statistics bureau, Statistics Indonesia, has reported.
The first trade deficit in three months was measured at US$2.5 billion last month, according to Refinitiv Eikon.
The figure is the largest monthly deficit recorded since 2013 and during the administration of President Joko Widodo, surpassing the US$2.05-billion trade deficit in December last year.
The April figure compared with an average forecast of US$500 million in a Reuters study and a US$671 million trade surplus in March.
Non-oil and gas exports were down 11 per cent to US$11.9 billion with polluting coal, environmentally ruinous palm oil and electronics remaining the top three commodities.
It is a contrast to March and February when Indonesia recorded trade surpluses of US$670 million and US$330 million respectively.
Increased demand for consumer goods imports, such as frozen meat, boneless bovine, apples, pears and running shoes, also widened the deficit.
China remains the largest export destination, buying up US$2.04 billion worth of Indonesia goods. The United States and Japan followed with imports of US$1.38 billion and US$1.05 billion respectively. Exports to the European Union, with which Indonesia is having a dispute over palm oil-based biofuel, were recorded at US$1.16 billion.
Exports from Asean’s largest economy dropped 10.8 per cent from March to US$12.6 billion, mainly due to a 35 per cent slump in oil and gas exports to US$740 million.
The trade dispute between Donald Trump and China has lowered oil demand, while supply disruptions in Venezuela, Iran and Libya have worked to push up prices.
The Indonesian deficit makes the central bank less likely to ease monetary policy in the near term, said Wisnu Wardana of Bank Danamon in Jakarta.
“We think there’s a slim chance of a shift in monetary stance for the time being,” the economist said.
Bank Indonesia has been pressured to cut interest rates amid reduced inflation and weakening growth.
The central bank, however, has been saying it wants to see a significant reduction in Indonesia’s current account deficit, which shows trade in goods and services, before making any reduction in interest rates.
Financial chiefs want to cut the current account deficit to 2.5 per cent of GDP this year, down from 3 per cent last year.
US-China trade tensions are also renewing pressure on Indonesia’s rupiah.
“The most effective way to manage the trade balance amid the global economic slowdown is to impose tighter import policies,” BPS chief Suhariyanto told the media. “We hope the balance will recover in the next few months.”
Tanjung Bara coal terminal, East Kalimantan. The poor trade figures probably only reflect a temporary shift. Picture credit: Wikimedia